Vertex Pharmaceuticals announced the results of a Phase 3 study conducted in Europe and Australia of tezacaftor in combination with ivacaftor in children aged 6 through 11 years with cystic fibrosis who have either two copies of the F508del mutation or one copy of the F508del mutation and one residual function mutation. The study met its primary endpoint of absolute change in lung clearance index through 8 weeks of treatment, demonstrating a statistically significant improvement in LCI2.5 among patients treated with tezacaftor/ivacaftor. The regimen was generally well tolerated and safety data were consistent with those observed in previous studies with tezacaftor/ivacaftor. This efficacy study was designed to support a submission to the European Medicines Agency to extend the indication of tezacaftor/ivacaftor in this patient population. Vertex plans to submit the application in the second half of 2019. In late 2018, Vertex submitted an sNDA to the U.S. Food and Drug Administration for tezacaftor/ivacaftor based on a previously completed Phase 3 safety study in children ages 6 through 11 years of age conducted in the U.S. and Canada. The data announced today are from a Phase 3, randomized, double-blind, parallel-group study to evaluate the efficacy and safety of tezacaftor in combination with ivacaftor in children ages 6 through 11 who have either two copies of the F508del mutation or one copy of the F508del mutation and one residual function mutation. Subjects were randomized 4:1 based on their genotype to tezacaftor/ivacaftor versus a blinding arm. The study randomized and treated 54 subjects with TEZ/IVA, 10 with placebo, and 3 with ivacaftor. The primary endpoint of the study was the within-group absolute change in lung clearance index from baseline through Week 8 in patients treated with tezacaftor/ivacaftor. LCI2.5 measures the efficiency of ventilation in the lungs by quantifying how many standard lung volumes it takes to reduce exhaled nitrogen to 2.5 percent of its starting value when breathing pure oxygen. LCI is considered a more sensitive measure to detect early lung disease than forced expiratory volume in one second. Higher LCI scores indicate poorer lung function. To participate in the study, children at an initial screening visit had to have an LCI2.5 greater than or equal to7.5, which is considered the cutoff for abnormal gas exchange. In the study, 54 children that were treated with tezacaftor/ivacaftor experienced a mean within-group absolute improvement in LCI2.5 of -0.51 through 8 weeks. Overall, safety data were similar to those observed in previous studies of tezacaftor/ivacaftor. The most common adverse events among those patients receiving tezacaftor/ivacaftor were cough, headache, and productive cough. No serious adverse events or adverse events leading to treatment discontinuation or interruption were observed.

Vertex price target raised to $234 from $192 at BMO Capital. BMO Capital analyst Do Kim raised his price target on Vertex to $234 and kept his Outperform rating after its "solid" Q4 beat on earnings and revenue. The analyst is also increasing his long-term cystic fibrosis revenue projections with worldwide franchise peak sales estimated at $8.4B and believes that the company's outlook for 2019 CF sales will prove "conservative" since it "only accounts for existing reimbursement agreements".

Vertex downgraded to Hold at Maxim on valuation. Maxim analyst Jason McCarthy downgraded Vertex to Hold from Buy after its better than expected Q4 results. The analyst notes that 2018 marks another "great year" for the company's CF business, with revenue of $868M topping consensus while rising 11% from last year. McCarthy adds that he still expects the franchise to grow amid Symdeko launch ramps in U.S. and Europe, but sees the valuation on the stock being potentially stretched.